Country expects cocoa output rebound as new season starts

Ghana forecast a rebound in cocoa production to 850,000-900,000 tonnes in the season that started on Friday after disappointing output in 2014/15 and raised the price it pays farmers by 22 percent.

Cocoa is Ghana's most important export crop but a lack of rainfall across the cocoa belt has raised fears among farmers and industry officials that the world's number two grower could be facing another poor crop.

A senior government official said cocoa purchases in the just-ended 2014/15 season stood at 735,000 tonnes as of Sept. 24. Final figures for the season have not yet been announced.

"This year if all factors will be favourable especially the weather, we are expecting 850,000-900,000 tonnes," said Stephen Opuni, chief executive of cocoa regulator Cocobod. "All projections are subject to review."

A cocoa buyer for a leading firm said the government's projection for the new season was "very optimistic".

The government will pay 6,720 cedis ($1,759) per tonne from 5,600 cedis paid in the just-ended season and 425 cedis per 64 kg-bag of cocoa including a five cedis bonus, Deputy Finance Minister Cassiel Ato Forson told a news conference.

The purchase price is crucial to deter smuggling into neighbouring Ivory Coast, the world's leading producer. Ivory Coast set its producer price at $1,718 per tonne.

Ghana raised its producer price last season but some farmers continued to smuggle due in part to the inflation rate, which stood at 17.3 percent in August, and a sharp decline in the value of the cedi against the dollar.

Cocoa revenue is crucial to the government as it struggles to overcome a fiscal crisis with the aid of an International Monetary Fund programme.

Ghana had one of the hottest economies on the continent due to exports of gold, cocoa and oil but economic growth has slowed sharply in the last two years due to falling global prices for commodities and the macro-economic problems.

"Government...set up a Stabilization Fund with annual contributions from the FOB price as a risk mitigating mechanism against declines in international cocoa prices," Forson said.

At the same time, Cocobod is under pressure to produce accurate forecasts because its decision to downgrade its initial projection of more than 1 million tonnes for last season took markets by surprise.